I have mineral in Roosevelt county and they have not started drilling there either. The lease expires at the end of August.
Jordan/Terri: I also , have minerals in both Sheridan and Roosevelt Counties. Don’t look for any changes to occur in the near future for these areas. As your leases expire, expect to endure a significant period of being unleased as these areas were not in the catagory of high priority even thought leasing was being pursued on a regular basis during the high prices. As I stated in my earlier post, stay abreast of the current situation and don’t fall victim to bad leases in order to get your area re-leased. Good luck.
Thanks Charles!
Yes that maybe true for Williams County, the northern counties in the Bakken may be better if oil goes up by late 2016. But the southern counties not in the Bakken formation will recover much slower and expecting new drilling in those areas will take a long time. Most Red River formation oil require $75 per barrel just to be profitable, Bakken formation can make a profit at $25. It’s all about the formation your oil located in. Bakken sweet crude will always be better than Redriver sour prices.
In your area a three lease is reasonable, but not outline areas in the future. The leases in the future will have a lot less wiggle room. Cancellation of permits is the new norm, they are very selective and only drill where the oil is Bakken sweet, cheap to extract, and profitable at prices below $50. per barrel.
The “boom” has cooled for a while, even rents and home prices have come down due large layoffs at Whiting, Halliburton, Continental Resources, and Baker Hughes. Many companies are nervous, we more layoffs predicted to come soon.
Since the boom started ND has had the lowest unemployment in the country not this year Nebraska has the lowest. Even grocery prices are coming down.
Leases are going to be low for a while and new drilling limited. The ND department of minerals expects at least a 40% decline in new wells.
Lou Anne:
Thanks for sharing your info. Love your statement…“oil will always be there for future leases”. This is so true and remember, this is not the first time that an oil boom has been deflated. Look back at the history of this industry and look at the rebounds that have occurred. As you stated, the oil is still there and lots of the areas are proven except that at the current per bbl price, it is just not worth the cost to drill and produce. As I stated earlier, don’t get worried as the oil is there and eventually, prices should be back in the range whereas drilling activity will increase.
The cost of oil has had a major effect on leasing bonuses in the outline areas of the Bakken such as southwest Stark, Billings, Golden Valley and Slope counties. Those areas peaked at $1500+ per acre with 18- 20% royalty in early to mid 2014, now they are back down to a five year low of $200-$250 per acre at 18% royalty. That is if you get a call to lease at all.
Most of the drilling active if not all has gone north to Dunn, McKenzie, Mountrail and Williams counties because they can still be profitable at $50 per barrel. It’s much cheaper to drill for the Bakken formations then Red river and other deeper formations. Oil companies are trying to cut cost by every means possible, like drilling on the same pad in “proven hot spots”, high oil output areas, (5000 bbl per month) lower lease options and fewer wells.
Northern counties are still doing three-year leases, but outline areas only five if any. Even when oil prices go up they will keep this standard in place for a few years to recoup today’s losses.
So if your in the northern counties I would expect at least a 50% decline in bonus offers depending on production in your area, but three year lease is still an option. You may have to take a smaller bonus check for now, but it’s highly likely they will not drill in your area for a while. So your risk of drilling at a low price now is low, but your get a bonus check while you wait for times to get better.
Outline areas are dramatically less if at all depending on area production, but five leases. Which maybe OK because you can lease with very little risk of drilling and still get a bonus check while you wait for it to rebound.
MaryAnne: I agree with your post but I expect oil prices to slowly rebound into the 4th quarter of the year which might make the bonus amounts higher depending on the location of the mineral property. I have minerals in Williams County which is currently under lease but expiring in September. Active wells located in both spacing units to the East and West of this area. My area previously had two wells permitted but those permits have been canceled. I look for lease offers to occur in the 1st or 2nd quarter of 2016 depending on the price of oil at that time. My thoughts is to stay abreast of the going royalty amounts and not focus totally on the bonus amounts but try to get a reasonable amount for bonus offers. Secondly, I would never consider a five year lease as three year leases are best in my opinion with no extension clause. Finally, I think that the mineral owners should not be extremely eager to lease as this could result in a low ball deal overall. I will sit back and watch the total picture on what is occurring and what is predicted as time moves on as many factors will occur over the next year that will influence the price of oil. Currently we are in a supply/demand situation whereas the supply outweighs the demand. As reserves begin to be depleted along with fewer wells being drilled, I think prices will slowly begin to rebound to a profitable amount which will attract better lease offers. Just my thoughts on the matter.
I have mineral in Sheridan county and they haven’t started drilling as of yet so I can expect nothing to be happening at all for quite some time right??
Thank you, you have been very helpful
I too have mineral rights in Richland Co. One lease expired Dec 2014 the other will expire Dec 2015. Contacted Transcontinent but they have no interest in renewing so guess the falling price of oil has had an impact on us mineral owners. My only consolation is that, hopefully, the oil will always be there for future leases. Thanks so much for sharing info on this site everyone. If I do happen to get an offer, will post to keep the group up to date.
No, I really don’t.
It’s a good idea, Ron. One I’ve often had. There are groups trying to buy minerals, but they’re not the normal small mineral holders you’d see on this site. Drill/Complete in ND costs average $8mm. I’ve been collecting data for years on all my wells per the other mineral holders. I would be interested in merging mine with other mineral owners to attain the size of entity that had greater access to capital markets (I’m only about 2500 net acres in Bakken)…but so busy, who knows if I’ll get around to it.
So a single well costs 8 million just to leave a Christmas tree to tie into? Never mind then lol.
I was thinking a couple of guys could punch a hole for like low 5 figures then figure out how to get it to a tank from there. What does land with mineral rights cost in proven areas? If I had 8 million I would just retire right now not be in ND lol.
I purchased a private partnership to get aactivity in the Bakken site. The partnership is closed, but they are opening another one. You could contact ny nephew who has a finance business and is a broker for Reef. His business is the Osland Finance Group, located in Scottsdale AZ. http://www.oslandgroup.com/
That sounds like a good idea, everyone has to start somewhere, even Rockefeller did lol. Thank you for the references I will definitely follow up with these. The key thing is I want to make money off the meter (even if its only 5% or less) rather than off stock price changes or some other sketchy derivative or bundled asset. The meter never stops unless the well goes dry (and that’s just the risk of it). Even at 50$ oil you are still making money just not as much. And if you can buy into a grouping of wells where you can make money off the meter that’s even better.
I would advise to spent plenty of time to educate yourself in exactly what you want to get into. I inherited my minerals rights and have even leased them only to sit on it until they decide whether or not they even want to spend the money on drilling. Which brings up another subject. In my case, they drilled a well which according to all reports, was on our land but when I called the driller, they denied it was on our property so say they won’t pay anything. The drilling had many issues with staying on the horizontal plane. It ended up a failure after pumping several hundreds of barrels but my lease says I get a portion from the wellhead. Is there an avenue to pursue? This was last year or so ago…
sorry thats suppose to say I had a lease for less then a year
Are there any groups of people in ND that are able to buy mineral rights and pool money to punch a few holes in the ground that are not part of some oil major (other than maybe hiring a rig to punch the hole). Producing into a tank and making money. Do tanker trucks make the rounds or how is the oil sold? I would be interested in saving up some money and going in with a group of people in the next few years. Does anyone know what it costs to punch a hole in the ground in ND. In AK it is hugely expensive but I imagine ND to be much cheaper.
Ron, that ain’t happening. But what you could do is buy into a deal on Energynet for low 5 figures. Get it cheap now and wait for another oil bull to kick in. I’ve seen some smokin’ deals.